Overview Of 12AA Registration

The non-profit making organizations, trusts and societies are obligated to comply with 12AA Registration as a requirement under the Income Tax Act of India. The Income Tax department issues this registration to define an organization as charitable in terms of income tax. 

With 12AA registration, an NGO or trust may claim exemption of its income and can apply in future to obtain 80G registration, donor funding as well as government grants.

To illustrate, an NGO dealing with literacy in Mumbai was registered under 12AA and later applied under 80G to make its donors claim deductions on the donations they made to the organization as a result of the 12AA registration not only obtained compliance but also established credibility of the organization and thus it was easy to get the contributions and grants through the 80G registration.

At the present time, all charitable organizations in India which intend to enjoy tax exemptions have to register 12AA. Any non-compliance may result in complete taxation of his income, disallowance of donations to his taxation and legal examination by the Income Tax Department.

Under Section 12A of the income tax act, all charitable organizations including trusts, societies and Section 8 companies must be registered as 12AA. 

The registration guarantees that the income of the organization is not subject to taxation in case it is utilized in charity matters and good records are kept.

Indicatively, a child healthcare NGO based in Delhi obtained 12AA registration, which would cost it claim tax exemptions and better donor trust. The registration procedure will ensure that the organization is only registered under charitable or religious purposes, complies with the statutory requirements and that the financial records are also open.
Today, this is completely online on the official portal of the Income Tax Department. 

Organizations should provide documents that include trust deeds, details of the governing body, PAN, bank account details and audited financial statements. Checking helps in keeping the organization in line with charitable goals as per the law.

The advantages of 12AA registration are not just limited to tax exemption. It is the foundation of the 80G registration that grants tax exemption to the donors so that fundraising will be more efficient. Also, CSR funds, government grants, and donor contributions are available to organizations registered 12AA, creating a sustainable pattern of charitable activities.

As an example, one of the environmental NGOs in Bengaluru has used 12AA registration to access corporate and individual donations and has extended its tree plantation and conservation initiatives to various districts.

How We Can Assist You

In AtCorpCare, there is an easy and compliant registration of 12AA by NGOs, trusts, and non-profit making organizations. Ready in a matter of weeks, dealt with by experts.

Step 1: Collection of all Documents: We gather and certify all the necessary documents, such as trust deed/society registration certificate, PAN, bank details, all the information of the governing body, and financial statements. Rejection will be avoided and processing will run smoothly due to appropriate preparation.

Step 2: Eligibility Check- We check whether your organization meets the needs to receive 12AA registration in the light of charitable intent, compliance history and activity reports.

Step 3: Application Drafting - We write the application properly with the description of objectives, activities, and financial information.

Step 4: Representation to Income Tax Department -The application is filled online or offline according to the existing guidelines. Any supporting documents are checked and attached in order to eliminate mistakes.

Step 5: Follow-Up- We liaise with the Income Tax Department when questioned or asked to do further verification.

Step 6: Certificate Issuance- Once authorized, your organization is issued with the 12AA certificate, which implies that it is treated as a charitable organization to the tax laws.

Step 7: Post-Registration Guidance -We are offering guidance on how to remain in compliance, file returns and use 12AA registration to access 80G, grants and CSR funding.
E.g. A NGO in Hyderabad that actively works with women had to receive 12AA registration through AtCorpCare in 20 days to be able to have an immediate right to tax-exempted status and be recognized as a donor.

Applicability

• Trusts which are established on a charitable or religious basis.
• Societies under Societies Registration Act, 1860.
• Section 8 Companies incorporated as non-profits by Companies Act, 2013.

As an illustration, a Pune-based education trust received a 12AA registration, permitting it to tax income exclusion, and allow it to raise the donor contributions as well. 

The registration provides adherence in the Income Tax Act and is the starting point of organizations with intention to seek the 80G certification.

Nowadays, any non-profit organization that intends to claim the exemption of income tax should have 12AA registration. 

Organizations that are not so certified may face complete taxation of donations, failure to claim exemptions, and loss of trust of the donor.

Who Can Apply

Establishments that are eligible to register 12AA are:

• Trusts incorporated in the Indian Trust Act.
• Societies under Societies Registration Act, 1860.
• Section 8 Companies registered by the Companies Act, 2013.

As an example, a NGO located in Chennai, which was engaged in healthcare promotion, applied to be registered as 12AA and took the place of enjoying income tax exemptions. The applicants should prove that the organization is a charity or religious organization, is not established to distribute profits and has clear accounts of money.

The organizations which do not meet these requirements are usually discarded, and this aspect underlines the need to seek professional help when applying.

Documents / Information Requirement.

In order to apply to 12AA registration, the following documents would be needed:

• Trust deed, society registration certificate or Section 8 company certificate.
• PAN card of the organization.
• Bank account information of NGO/trust.
• Name of members of the governing body with identity proofs.
• Audited annual reports and audited financial statements.
• Information of the operations and goals of the organization.
• Treat evidence of the organization.

Any approvals or exemptions in the respective sections (where applicable) done previously.
Example:Jaipur based non-governmental organization that deals with rural education presented audited account, trust deed and activity report and obtained 12AA registration, which guaranteed conformity and unhindered granting of registration.

Step-by-Step Procedure

• Confirm that one is eligible to register 12AA.
• Collect and compile all the necessary documents.
• Draft detailed application with focus on objectives, activities and accounts.
• Application online/offline to the Income Tax Department.
• Respond timely to queries or verification in the department.
• Then proceed to follow up till the issuance of the certificate.
• Get 12AA certificate certifying charitable status.
• Ensure adherence by reporting on an annual basis and funds used appropriately.
   

Case Study:Lucknow based NGO has managed to get 12AA registration in 25 working days with the help of experts, unlike other cases where approvals are frequently delayed due to mistakes.

Benefits of Service

Income Tax Exemption:Charitable status is legally stated meaning that income will be exempt.

Eligibility to 80G:12AA is required so as to apply for an 80G donor deduction certificate.

Credibility: Builds up trust among donors, government and CSR programs.

Funding Opportunities: Allows reaching CSR contributions, grants, and donations.

Compliance: Minimizes risks of sanctions, audit and legal investigations.

Scenario: An NGO in Kochi that deals with skill development used the 12AA registration to gain both government and non-government funding which saw operations go very high within the state.

What We Can Do For You

We do the full registration process of 12AA at AtCorpCare, where the NGOs are registered quickly and properly and with expert advice.

Conclusion

The Indian legal system has a registration called 12AA Registration as a basis on which a non-profit organization operates and is exempted from taxes in India. Applying to AtCorpCare allows companies to obtain approvals on time, abide by the regulations in regards to the Income Tax and allows them to seek 80G and the donors funding with ease.
E.g., an NGO in Delhi that deals with sanitation received 12AA registration, and instantly gained more credibility among donors, which facilitated raising funds and implementing the project. Immediacy in registration eliminates chances of punishment, legal adherence and confidence between contributors.